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Greenspan calls on boomer advisors to act

The Millennium Broadway Hotel near Times Square was the setting for an intimate dinner with Dr. Alan Greenspan last April. Sponsored by the Million Dollar Round Table, the Boomertirement Summit hosted financial planning experts from across the globe. The impressive speaker line-up featured Greenspan, Moshe Milvesky and leading boomer expert Dr. Ken Dychtwald. We asked Dychtwald to comment on what Greenspan had to say about boomer retirement prospects. Greenspan's comments and Dychtwald's "color analysis," are provided below. Each had a lot to say, and we'll continue the series in upcoming issues.

Alan Greenspan: We have to recognize that what we're going through is unique in world history. Retirement is a relatively new phenomenon. As a society, we've dealt with it successfully in the past few decades. But we've never had such a huge group of individuals going into the system at once and then living so long. I don't think we're ready for this, but it's not insurmountable.

Ken Dychtwald: Alan Greenspan is a truly one-of-a-kind communicator. It was fascinating to hear a man who is so thoughtful and, I believe, above a level of political drama. He's not the kind of guy that yells out that the sky is falling. Here he was saying that we're heading for serious trouble and that the government has made promises it will not keep. I was sitting in the audience and kept thinking of the canary in the coalmine. He reminded us that this retirement dynamic is relatively new. We might think its various entitlements are a proven social exercise, but it's still an experiment.

AG: The funding problems could be solved in 20 minutes, with the first 15 minutes taken for pleasantries. The only thing missing is the political will to make it happen. The government should never promise its constituents more than it can deliver. To do so is immoral. We have promised more in benefits than we are taxing. We are not getting enough to support the promises we made in Medicare. I predict we will have a very dramatic increase in co-payments, with the upper-income levels experiencing 100 percent co-payments. It will therefore become more of an individual responsibility.

KD: The immoral nature of a government that promises more than it can deliver was one of the biggest the applause lines of the night. Our entitlement expectations are unrealistic, and he was very clear to say that the larger looming problem was Medicare. That day I felt we reached the tipping point, because here was Greenspan with full cognizance raising the red flag. He indicated that far more responsibility for funding one's future will fall to the individual, and even began to indicate the kinds of financial products that might get the job done.

AG: There have always been a lot of people paying in. Life expectancy is moving along at a very rapid pace. If we can get our house in order, we can maintain our economic leadership in the world. But we have to communicate this fact better to our political leaders. The numbers are evident. But each individual has to make a determination
on their own.

KD: I don't think he was indicating that the problem could be solved in five minutes, but I think the solutions could be stated in five minutes. The challenge isn't that we're not recognizing the problem. The problem seems to be moving towards solutions, bringing about a future in which changes will salvage existing programs and build bridges to solvency for the next generation. That requires courage from our leaders, and the requisite communication skills. We've got a country where we don't trust anybody with our financial matters. Politicians say something and we think it's politicized. Financial firms have lost their capacity to speak the truth (if they ever had that capacity) in a way that the consumer population believes is unbiased. So we're spinning towards a future in which conceivably tens of millions of lives are at risk and there's nobody to chart the course. It's not as though the variables are unknown to us. And the solutions are not that complicated.